...VRIO analysis is a suitable strategic tool that is essential in evaluating the sustainability of a corporation’s competitive advantage. By analyzing the capabilities and resources of a firm, the management is able to identify the suitable approaches of increasing the firm’s market share and broadening the consumer base. One of the key elements encompassed in the VRIO framework entails the value of the identified capabilities and resources. In order to acquire a sustainable competitive advantage over other participants in the targeted market, a company ought to focus on the resources that increase a firm’s value. This includes the firm’s ability to exploit the available business opportunities and mitigate the potential risks. A company can also enhance its competitive advantage by focusing on rare resources in the market. Most of the valuable resources, which are rare in the market, are costly for other companies to imitate. For this reason, corporations ought to organize their valuable resources in order to mitigate the potential business risks while maximizing the available opportunities. In order to present the VRIO analysis as a suitable tool in enhancing a firm’s competitive advantage, this discussion will compare and contrast True Religion Apparel Inc. and SodaStream International. SodaStream International and True Religion Apparel Inc. have valuable resources that have aided the companies in enhancing their competitiveness. To begin with, SodaStream International produces...
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...“VRIO framework is the tool used to analyze firm’s internal resources and capabilities to find out if they can be a source of sustained competitive advantage.” In order to understand the sources of competitive advantage firms are using many tools to analyze their external (Porter’s 5 Forces, PEST analysis) and internal (Value Chain analysis, BCG Matrix) environments. One of such tools that analyze firm’s internal resources is VRIO analysis. The tool was originally developed by Barney, J. B. (1991) in his work ‘Firm Resources and Sustained Competitive Advantage’, where the author identified four attributes that firm’s resources must possess in order to become a source of sustained competitive advantage. According to him, the resources must be Valuable, Rare, imperfectly Imitable and Non-substitutable. His original framework was called VRIN. In 1995, in his later work ‘Looking Inside for Competitive Advantage’ Barney has introduced VRIO framework, which was the improvement of VRIN model. VRIO analysis stands for four questions that ask if a resource is: Valuable? Rare? Costly to Imitate? And is a firm Organized to capture the value of the resources? A resource or capability that meets all four requirements can bring sustained competitive advantage for the company. Valuable The first question of the framework asks if a resource adds value by enabling a firm to exploit opportunities or defend against threats. If the answer is yes, then a resource is considered valuable. Resources...
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...VRIO Framework of KFC VRIO framework use to find out the core competencies or sustainable competitive advantages which are helping firm to operate profitably in long term. For KFC, we try to find out its competitive advantage where we used four key components which help to identify in what KFC have competitive advantage compare to its competitors. Resources Valuable Rare Inimitable Exploited by the Organization Brand Recipe Experience X X Location X X Price X X Advertisement X X X Through the use of VRIO framework we have found that brand value and the recipe of making food in KFC are its competitive advantages. The reason behind these- Brand: The brand or the logo of Kentucky Fried Chicken, the KFC, is a registered trademark for their company which is a part of Yum! Brand. As it is registered it is inimitable and thus it is rare, as only the company it is franchised to gets the right to use this logo. The logo acts as a brand name, with Colonel Sanders with his signature string tie, wearing a red apron, and with this uniqueness they have become very famous and this individuality has made it easier for people to recognize it, making it a very valuable essential for the company. And since the beginning of the KFC it has been exploited by the company thoroughly, first by Colonel Sanders himself, and then by the companies that owned it. Recipe: The secret recipe that was used by Colonel Sanders since 1940 has been invariably one of the...
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...Applying the VRIO framework to Purvankara 1. The “Purva” brand Purvankara is India’s one of the most profitable real estate development companies and is one of the largest and most respected brands in South India. This brand recognition is built on the following bases: • Its extensive engagement across the entire real estate segment. It engages in luxury as well as affordable projects through its 100% subsidiary Provident Housing Limited. • Its geographical spread through entire South India (Bangalore, Mysore, Chennai, Kochi, Hyderabad, Mysore) as well as in Colombo and UAE. • Its 3 and a half years of rich experience in property development, real estate and construction. • Its successful track record of completing 34 residential projects and 2 commercial projects spanning over an area of over 7.80mn sq. ft. • Its unique and robust execution capability. Purvankara has developed exclusive brands for different products and consumers. Its flagship brand is addressed towards the premium exclusive client and its Provident brand addressed towards the premium affordable segment. This has mitigated the risk of erosion of its brand image across the entire spectrum- the premium and the mid-mass housing segment. Purvankara has developed a business built around stakeholders’ trust. For this resource of Purvankara: Is the resource Valuable: Yes Is the resource Rare: Yes Is the resource costly to Imitate: Yes Is the firm Organized towards this resource: Yes Competitive Implications:...
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...1. Specify the scope of the planning and its time frame. 2. For the present situation, develop a clear understanding that will serve as the common departure point for each of the scenarios. 3. Identify predetermined elements that are virtually certain to occur and that will be driving forces. 4. Identify the critical uncertainties in the environmental variables. If the scope of the analysis is wide, these may be in the macro-environment, for example, political, economic, social, and technological factors (as in PEST). 5. Identify the more important drivers. One technique for doing so is as follows. Assign each environmental variable two numerical ratings: one rating for its range of variation and another for the strength of its impact on the firm. Multiply these ratings together to arrive at a number that specifies the significance of each environmental factor. For example, consider the extreme case in which a variable had a very large range such that it might be rated a 10 on a scale of 1 to 10 for variation, but in which the variable had very little impact on the firm so that the strength of impact rating would be a 1. Multiplying the two together would yield 10 out of a possible 100, revealing that the variable is not highly critical. After performing this calculation for all of the variables, identify the two having the highest significance. 6. Consider a few possible values for each variable, ranging between extremes while avoiding highly improbable values...
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...alue. A firms resources and capabilities should add value by allowing the firm to exploit and mitigate its S&W’s. Likewise, adding value as to a firms resources and capabilities will lead to competitive advantage, providing your firm exploits these value added attributes. Taking the example of IP (above) so long as the competition cannot copy your value added or imitate it, your firm will have a Competitive Advantage. But in today’s world sustainable Competitive Advantage is not possible. So yes, a competitor may well innovate something that reduces your value added. For example, in Oct 2001 Apple’s Steve Jobs, launched the iPod, and it could store up to 5000 songs. The MP3 player and its imitators were now, not as valuable. Rareness. If similar firms control similar valuable resources and capabilities, then they are not rare. The smartphone was rare when introduced by Apple and so it was valuable and rare. Samsung launched the Galaxy, as well as Lenovo and others, it quickly imitated the iPhone, and so the smartphone does not have rarity for either, or any company today. This does not mean that common or similar resources and capabilities are not useful, they may well be if your firm deploys them and exploits them better than the competition. Ryanair and Southwest have valuable aircraft the same as any other flyer, but their Competitive Advantage comes from how they deploy and use these aircraft with no frills operating costs and pay as you go additional resources. Imitability...
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...performance. Disney has facilities internationally, including theme parks, movie studios, and retail locations. Intangible Resources The Walt Disney Company has strong brand image. It has a reputation with customers for family-friendly, high quality entertainment. The company also has extensive human resources. By 2000, Disney had 110,000 employees throughout its divisions. Organizational Capabilities Disney is famous for the “Disney Difference,” its high quality customer service and attention to detail (Smith, 2011). Disney’s organization is based on the traditions of Walt Disney himself and are taught to every new employee (Disney, n.d.). Disney also has a huge and diverse organization, with departments ranging a variety of industries. VRIO Analysis Value The Walt Disney Company has valuable tangible resources. The financial resources allow the company to invest in new ideas and innovations. Its international facilities give Disney access to many markets. Disney’s intangible resources and organization capabilities’ value depends on how they are harnessed. Brand awareness and a large organization do not have inherent value; they must be used effectively by the company. Rareness The Walt Disney Company’s tangible assets are not rare; many other companies have money and international facilities. Disney’s organizational resources, however, are extremely rare. Very few companies have such strong traditions and values as the Walt Disney Company. The company is also one of just...
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...Vrio- Analysis of Toyota Toyota Production System(TPS) Based on the Just- in- Time production, the Toyota Production System built vehicles based on immediate market demands rather than in anticipation of future demands. This unique strategy was created to cut costs and to eliminate waste. Valuable: Yes, because it has been proven to keep production costs low. Rare: Yes, just-in-time production is a popular strategy used by companies in all industries, however Toyota’s methodology is very rare. Inimitable: Yes, many companies have tried to recreate the system, however none have been able to do it in as efficient of a manner. Organization: Yes, Toyota has been using this system since the 1960’s and have been perfecting it along the way. Competitive Implication: This creates a sustained competitive advantage Time-Based Competition Strategy(TBC) Process that includes both reduced cycle time and reduced costs, while increasing profits and accelerating growth. Valuable: Yes, in addition to the benefits mentioned above, TBC creates increased value differentiation, increased variety and flexibility, and strengthened relationships with customers. Rare: No, other companies use this system, however Toyota and other Asian companies were one of the first ones to start using it. Inimitable: No, other companies such as Wal- Mart and Dell use TBC to improve their leading market share within their respective industries. Organization: Yes, the company adopted the strategy and has...
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...문예송 2010-10415 Principles of Accounting Individual Report Wine Industry Vina Concha y Toro (Chile) History of Chile Wine and Concha y Toro The Chile wine industry has enjoyed immense success and growth on the past two decades. The quality of Chile wine brands are at par with the most famous brands from the Old World countries and has been able to secure international prestige. Wine making began from the late 16th century by the Spanish conquistadors and missionaries. Despite the political connection to the Spanish, Chile wine is historically influenced by the Bordeaux French wine which started in the late 19th century with many wealthy Chile wine makers importing Bordeaux grapes such as Cabernet Sauvignon, Merlot, Malbec, Carmenere, and Cabernet Franc to plant in the ideal valleys of Chile. These species of grapes were rare and are considered the “lost” species of grapes from Bordeaux due to having been imported before the phylloxera (blight) epidemic which ravaged and destroyed Bordeaux vineyards in the late 19th century. The ruined wine industry in the late 19th century also prompted many French wine makers to travel to South America bringing their experience and accumulated traditional techniques. This was the second tide of Chile wine history where currently famous firms were established by the wealthy wine makers of Chile such as Vina Errazuriz by Don Maximiano, Ochagavia Wines by Don Silvestre Ochagavia Echazarreta and Concha y Toro by Don Melchor de Santiago in the...
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...See discussions, stats, and author profiles for this publication at: http://www.researchgate.net/publication/229781501 Knowledge Based Resources, Entrepreneurial Orientation, and the Performance of Small and Medium-Sized Businesses, Strategic Management Journal, Jg. 24, S. 1307-1314 ARTICLE in STRATEGIC MANAGEMENT JOURNAL · DECEMBER 2003 Impact Factor: 3.78 · DOI: 10.1002/smj.360 CITATIONS READS 574 4,455 2 AUTHORS: Johan Wiklund Dean A. Shepherd Syracuse University Indiana University Bloomington 92 PUBLICATIONS 5,206 CITATIONS 189 PUBLICATIONS 7,587 CITATIONS SEE PROFILE SEE PROFILE Available from: Johan Wiklund Retrieved on: 06 November 2015 Strategic Management Journal Strat. Mgmt. J., 24: 1307–1314 (2003) Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/smj.360 RESEARCH NOTES AND COMMENTARIES KNOWLEDGE-BASED RESOURCES, ENTREPRENEURIAL ORIENTATION, AND THE PERFORMANCE OF SMALL AND MEDIUM-SIZED BUSINESSES JOHAN WIKLUND1 * and DEAN SHEPHERD2 1 Center for Entrepreneurship and Business Creation, Stockholm School of Economics, Stockholm, Sweden and Jonkoping International Business School, ¨ ¨ Jonkoping, Sweden ¨ ¨ 2 Leeds School of Business, University of Colorado, Boulder, Colorado, U.S.A. and Jonkoping International Business School, Jonkoping, Sweden ¨ ¨ ¨ ¨ While theory suggests that management has discretion in manipulating resources in order to build ...
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...Masters Programmes ------------------------------------------------- Assignment Cover Sheet Question: [Analyze a strategic issue facing Samsung Electronics Company] “This is to certify that the work I am submitting is my own. All external references and sources are clearly acknowledged and identified within the contents. I am aware of the University of Warwick regulation concerning plagiarism and collusion. No substantial part(s) of the work submitted here has also been submitted by me in other assessments for accredited courses of study, and I acknowledge that if this has been done an appropriate reduction in the mark I might otherwise have received will be made.” Introduction Samsung Electronics Company (SEC), Ltd founded in 1969 is a South Korean multinational electronics company and is the flagship subsidiary of the Samsung Group, accounting for 70% of the group's revenue. Since the introduction of monochrome television sets in 1971, it has grown on average 38 percent a year, broadening its product range from simple consumer electronics and home appliances to advanced information and communication equipment, computers and peripherals and semiconductors (Renee, 2007) . It is currently the world's largest manufacturer of mobile and smart phones, LCD Panels and televisions and displaced Apple Inc. as the largest technology company in 2011 (Renee, 2007). Industry boundary Samsung electronics has the following divisions * Consumer electronics (CE)...
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...------------------------------------------------- VRIO From Wikipedia, the free encyclopedia The VRIO framework, in a wider scope, is part of a much larger strategic scheme of a firm. The basic strategic process that any firm goes through begins with a vision statement, and continues on through objectives, internal & external analysis, strategic choices (both business-level and corporate-level), and strategic implementation. The firm will hope that this process results in a competitive advantage in the marketplace they operate in. VRIO falls into the internal analysis step of these procedures, but is used as a framework in evaluating just about all resources and capabilities of a firm, regardless of what phase of the strategic model it falls under. VRIO is an acronym for the four question framework you ask about a resource or capability to determine its competitive potential: the question of Value, the question of Rarity, the question of Imitability (Ease/Difficulty to Imitate), and the question of Organization (ability to exploit the resource or capability). * The Question of Value: "Is the firm able to exploit an opportunity or neutralize an external threat with the resource/capability?" * The Question of Rarity: "Is control of the resource/capability in the hands of a relative few?" * The Question of Imitability: "Is it difficult to imitate, and will there be significant cost disadvantage to a firm trying to obtain, develop, or duplicate the resource/capability...
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...Evaluating Firm Strengths and Weaknesses What Does Internal Analysis Tell Us? Internal analysis provides a comparative look at a firm’s capabilities • what are the firm’s strengths? • what are the firm’s weaknesses? • how do these strengths & weaknesses compare to competitors? Why Does Internal Analysis Matter? Internal analysis helps a firm: • determine if its resources and capabilities are likely sources of competitive advantage • establish strategies that will exploit any sources of competitive advantage Traditional research on firm strengths and weaknesses • Theories of distinctive competence – General managers as distinctive competencies – Institutional leadership as a distinctive competence • Ricardian economics • Penrose’s theory of firm growth Research on the skills of general managers, institutional leaders, economic rents and firm growth have been brought together to develop a rigorous model to analyze a firm’s strengths and weaknesses: the resource-based view of the firm The Theory Behind Internal Analysis The Resource-Based View • developed to answer the question: Why do some firms achieve better economic performance than others? • used to help firms achieve competitive advantage and superior economic performance • assumes that a firm’s resources and capabilities are the primary drivers of competitive advantage and economic performance The Resource-Based View Resources and Capabilities Resources: • tangible and intangible assets of a firm » tangible:...
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...Strategy Exam Framework Executive Summary (5%) I would recommend that (the company)… The company faces (the main issue), which has caused (major symptoms)… However, the following constraints must be addressed… - Timing - - In addressing this issue, the following alternatives were considered: - - - The alternatives were evaluated based on the following set of decision criteria: - - - The first alternative was selected because it satisfies (decision criteria). The second alternative was not chosen because it does not satisfy (decision criteria). Similarly, the third alternative was not preferred because it does not address (decision criteria). To implement the recommendations, the company should first (action plan). In the short term… In the long term… Issue Identification (10%) * Quantitative calculations Rule of 7272/# of years=Time it takes to double growth Rule of 114Number of years to triple growth Rule of 144Number of years to quadruple growth CAGR calculations CAGR=(1+Percentage growth)^n years Market share now versus market share in the future? (Current sales/Current market size) (Projected sales/Projected organic market size growth) Quantitative calculations Rule of 7272/# of years=Time it takes to double growth Rule of 114Number of years to triple growth Rule of 144Number of years to quadruple growth CAGR calculations CAGR=(1+Percentage growth)^n years Market share now versus market share in the future? (Current...
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...computer. As a resource it is more powerful than the original computer on the Space Shuttle, however, I could not land the Space Shuttle with it. So in this case I have a superior resource but an inferior capability. Resources and capabilities can take many different forms. Literally anything an organization possesses can be considered a resource. Examples include financial resources, plants, equipment, technology, reputation, brands, and organizational expertise. In short there is no potential constraint on what can be considered a firm's resources or capabilities. VRIO Analysis Given that almost anything a firm possesses can be considered a resource or capability how should you attempt to narrow down the ones that explain why firm performance differs? In order to lead to a sustainable competitive advantage a resource or capability should be Valuable, Rare, Inimitable (including non-substitutable), and Organized. This VRIO framework is the foundation for internal analysis.1 If you ask a business person why their firm does well while others do poorly, a common answer is likely to be "our people." But this is really not an answer, it may be the start of an answer, but...
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